Standard Life policyholders rush to cash in on flotation

Sunday 24 September 2006 05.02 EDT
First published on Sunday 24 September 2006 05.02 EDT

Standard Life is this week expected to reveal that up to a tenth of its policyholders have cashed in their investments since picking up their free shares in the life insurer's flotation.

In its first results announcement as a public company, Standard's UK life and pensions chief, Trevor Matthews, is expected to update the City on with-profits surrenders as well as the impact on its business of pensions simplification on A-Day last April.

Policyholders were required to keep their investments with the company until the July flotation to qualify for free shares, which meant that the group has had few surrenders for the past two years. Standard provided £19m for delayed surrenders in its last accounts.

Justin Modray of financial adviser Bestinvest estimated that, based on the experience of his firm's clients, between five and 10 per cent have sold within the past three months.

'Once they have got the share payout, they were happy to go,' said Modray. Standard's bonus rates and policy pay-outs have lagged behind industry leaders like Prudential and Norwich Union because of the impact of its high holdings of equities during the stock market crash. It was forced to sell these at low prices by regulatory and financial pressures - pressures which also led to the summer's flotation.

Wednesday's presentation is, however, expected to be upbeat. Recent new business figures have been healthy and it is one of the market leaders in offering self-invested personal pension plans, which are expected to take off following A-Day. The changes have prompted a lot of switching between financial companies, and Standard Life is believed to have emerged as one of the winners.